State Of U.P. Thru. Secy. Institutional Finance Up Lko And Ors vs. M/S Maa Vindhyavasini Tobacco PVT LTD Thru Dir Uday Prakash

Held

The Court held that the appellate authority rightly allowed the appeal preferred by the respondent and directed the release of goods and the transport vehicle. The Court reasoned that the provisions of Chapter 19, including Section 129 of the CGST Act, pertain to the release of goods intercepted during transportation, offering the assessee an opportunity to pay specified amounts for release. The quantum of penalty under Section 129(1)(a), (b), and (c) is determined under Section 129(3). This section provides an alternate mode for assessees to pay amounts and avoid litigation. If the assessee does not avail this benefit, the department can proceed under Chapter 15 read with Section 122 for determining tax liability and penalty. In this case, the respondent did not approach to avail the benefit of Section 129, and the appellate authority found the basis for initiating proceedings to be non-existent. Therefore, the Court found no reason to interfere with the appellate authority's order. The writ petition was dismissed.

Facts

The State of U.P. (Petitioner) filed a writ petition challenging an order dated June 22, 2019, passed by the appellate authority. This order had set aside a demand of tax and penalty imposed on M/s Maa Vindhyavasini Tobacco Pvt Ltd (Respondent) via an order dated May 17, 2019, under Section 129(3) of the CGST Act. The goods belonging to the respondent were intercepted on April 28, 2019, based on intelligence that they were being transported using pre-used tax invoices. Following the interception and recording of the driver's statement, an order was passed demanding Rs. 7,23,700/- as tax and Rs. 19,05,024/- as cess. The appellate authority found no material to justify the detention and seizure, holding that tax and penalty cannot be based on presumption.

Key Issues

1. Whether the appellate authority erred in setting aside the demand of tax and penalty imposed under Section 129(3) of the CGST Act, despite intelligence suggesting the goods were transported on pre-used invoices? The Petitioner argued that they had received intelligence that the goods were being transported twice on the same set of invoices. However, the Court noted that E-way bills are required under Section 138 of the CGST Rules, and the issue of these E-way bills being used twice did not emerge in the assessment order, nor was there a basis for the appellate authority to conclude this. The Petitioner contended that the appellate authority rightly allowed the appeal and directed the release of goods and the vehicle. The Respondent did not present arguments as recorded in the judgment.